Second-Hand Car Maker for Sale?

CNBC.com

Wednesday, 14 Feb 2007 | 11:13 AM ETCNBC.com

SHARES

Selling Chrysler “is not like selling a used car,” said Michael Robinet, Vice President at Global Vehicle Forecasts, to “Morning Call,” and you can see his point in more ways than one. Any automaker that can call itself no. 5 in America can hardly be ready for the scrap heap.

DaimlerChrysler announced today it’s exploring "far-reaching" options for its U.S. unit Chrysler and is pushing ahead with a major restructuring plan that will slash costs and cut about 13,000 jobs. The cost cutting exercise is known as “Project X.”

It’s only eight years since DaimlerChrysler became a single entity and the measures being unveiled by “Project X” to turn-around the company’s loss making U.S. arm, Chrysler, could seem to some investors drastic.

But then again causing the loss of 13,000 workers would suggest the need for some serious reconsidering in the way a company does business, even if shares in the company have surged on the news.

The automaker is trying to cut costs at its Chrysler Group by more than $2 billion, or $1,000 for every car sold in the United States. Meanwhile, DaimlerChrysler said its fourth-quarter earnings plunged 40% on weaker demand from Chrysler.

“DCX is looking at restructuring for the future, they have to make sure they are competitive not just in America but globally,” said Robinet.

At a time when Ford is struggling to hold on to its top spot on the global car manufacturing stage against Toyota, Robinet’s point about playing to the global audience seems to make a lot of sense.

What remains to be seen is whether Chrysler will accelerate into a profitable 21st Century or be broken up for spare parts.